Sectors: Software

US software stocks have bounced ~35% from their April lows putting their ASX peers to shame which are only ~7% above the same swing low. However, the real performance differential comes when we consider how far below their respective 2025 highs both sectors are, the ASX Software sector (-50%) vs S&P 500 Software sector (-12%) – a standout example of why the ASX has offered relatively slim pickings over the last 12-months, bar for the resources.

Dicker Data (DDR) delivered a strong 1H26 result, with earnings comfortably ahead of expectations and guidance upgraded. The technology refresh cycle we’ve previously highlighted continues to provide a meaningful tailwind, particularly across hardware and software, although after the recent share price strength we think much of the good news is now reflected.

XRO has been at the forefront of the “AI Disruption Trade” or “SaaSpocalypse”, whichever you prefer, with the stock falling almost 70% from its 2025 high. The company didn’t help things buying Melio for US$2.5bn in late 2025, by far its largest acquisition, effectively right at the top of tech valuations. In hindsight, we liked the acquisition of the US SMB bill-pay/payments platform, to combine accounting and payments and materially accelerate Xero’s US growth, just not the price XRO paid.

We’ve discussed at length the significant dispersion across ASX sectors over the past 12 months, with nowhere more evident than Materials and Technology. It reinforces our view that adding value in this market is increasingly about getting the stocks and sectors right, rather than simply calling the direction of the index.